Question

1. Sandhill Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for...

1. Sandhill Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $910,000. At the time of purchase, Torres’s assets had the following book and appraisal values.

Book Values

Appraisal Values

Land

$260,000 $195,000

Buildings

325,000 455,000

Equipment

390,000 390,000


To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made.

Land 195,000
Buildings 325,000
Equipment 390,000
   Cash 910,000


2. Teal Enterprises purchased store equipment by making a $2,600 cash down payment and signing a 1-year, $29,900, 10% note payable. The purchase was recorded as follows.

Equipment 35,490
   Cash 2,600
   Notes Payable 29,900
   Interest Payable 2,990


3. Flint Company purchased office equipment for $19,200, terms 2/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was:

Equipment 19,200
   Cash 18,816
   Purchase Discounts 384


4. Buffalo Inc. recently received at zero cost land from the Village of Cardassia as an inducement to locate its business in the Village. The appraised value of the land is $35,100. The company made no entry to record the land because it had no cost basis.

5. Carla Company built a warehouse for $780,000. It could have purchased the building for $962,000. The controller made the following entry.

Buildings 962,000
   Cash 780,000
   Profit on Construction 182,000


Prepare the entry that should have been made at the date of each acquisition. (Round intermediate calculations to 5 decimal palces, e.g. 0.56487 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Account Titles and Explanation

Debit

Credit

1.

enter an account title for the first transaction

enter a debit amount

enter a credit amount

enter an account title for the first transaction

enter a debit amount

enter a credit amount

enter an account title for the first transaction

enter a debit amount

enter a credit amount

enter an account title for the first transaction

enter a debit amount

enter a credit amount

2.

enter an account title for the second transaction

enter a debit amount

enter a credit amount

enter an account title for the second transaction

enter a debit amount

enter a credit amount

enter an account title for the second transaction

enter a debit amount

enter a credit amount

3.

enter an account title for the third transaction

enter a debit amount

enter a credit amount

enter an account title for the third transaction

enter a debit amount

enter a credit amount

4.

enter an account title for the fourth transaction

enter a debit amount

enter a credit amount

enter an account title for the fourth transaction

enter a debit amount

enter a credit amount

5.

enter an account title for the fifth transaction

enter a debit amount

enter a credit amount

enter an account title for the fifth transaction

enter a debit amount

enter a credit amount

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